First of all, J2EE web container lengthy restart is a huge overhead alone, and in case of iterating over a feature, I can easily see a 30-50% difference.
But second of all, from the article: "You didn’t write html, css or javascript – you wrote css in java, you wrote html in java and you wrote javascript in java." Can you imagine developing that?
A Google search reveals: "the only thing worse than XML/XSLT is a proprietary form of XML/XSLT -- which of course is what PayPal was built on (C++ on the backend)." (from http://looksgoodworkswell.blogspot.com/2012/09/why-you-shoul...)
I've been involved with writing Javascript in Java using GWT and it has poor developer productivity, especially as the project gets to anything beyond a medium size. At a medium size, compilation times get well above 5 minutes, and I can't even imagine a large app the size of a PayPal.
Imagine having to figure out the right XML/XSLT to transform into the right Javascript.
So it's not at all ridiculously implausible. At previous jobs, I worked with some really arcane stacks and you can't imagine the number of unnecessary layers that get in the way of good old GSD.